PBOC Will Provide Support to Banks Before Holidays

The Central Bank of China said it will allow some commercial banks temporarily hold less than the required reserves to help them cope with the high demand for cash on the eve of the Lunar New Year (February 16). According to analysts, this does not signal a change in the monetary policy of the bank. The Central Bank of China said that this step will help promote smooth operations in the money market and support financial services of financial institutions before and after the holiday.

In recent years, the People's Bank of China (PBOC) has provided banks with some form of liquidity support to meet the growing demand for cash from households and businesses before a big holiday. According to PBOC, some banks will be allowed to reduce their reserve requirement ratios by 200 basis points within 30 days.